How to hurt the US with tariffs: Target cranberries
Retaliatory tariffs from China, Mexico, Canada and the European Union are targeting the cranberry, a "quintessentially American export," according to The Wall Street Journal. About one-third of U.S. production is shipped elsewhere, so the tariffs could total $50 million annually for an industry that sold about $270 million of the fruit last year, the newspaper reported.
There's also a glut of U.S. cranberries right now, and the average price has dropped below $30 per barrel, or $5 less than the cost of production. The tariffs are expected to reduce sales even more, so growers are planning to divert up to one-quarter of this year's harvest in order to reduce the supply and hike prices.
"This is coming at a bad time for the industry," Brian Wick, executive director of the Cape Cod Cranberry Growers’ Association, told The Wall Street Journal. "These were the markets we were looking at for major growth."
Not only are most cranberries grown in the U.S. and Canada, but the tart red fruit is native to North America and holds a special place in our culinary culture. The harvest is not a large one — about 905 million pounds were produced last year, a 6% drop from 2016 — which is why exports are so critical to the relatively small cranberry industry.
According to the U.S. Department of Agriculture, China annually imports 15% of the U.S. cranberry supply — valued at $50 million — and it deliberately targeted cranberries for the tariff treatment, CNN reported. That's because Wisconsin produces more than half of the world's supply, is a swing state that turned out for President Trump in 2016, and is also the home state of Republican House Speaker Paul Ryan.
China has more than doubled its tariff on U.S. dried cranberry imports, according to FreightWaves, adding 25% to its already announced 15% tax. The EU, which imports more of the U.S. product than China — 95 million pounds, or more than anywhere else — placed a 25% tariff on cranberry juice concentrate back in March. Producers worry that if consumers in China and Europe face higher prices for U.S. cranberry products, they might simply pass them up.
"If cranberries get too expensive, they start using raisins or prunes or something that’s cheaper that’s grown somewhere else. If we all get replaced with raisins, we’re sunk," Linda Prehn, a Wisconsin cranberry grower and president of the Cranberry Growers Cooperative, told The Wall Street Journal.
Reducing the oversupply by diverting one-quarter of this year's harvest seems like a drastic move, but there aren't a lot of options available to cranberry growers and producers at the moment. Nearly all of the crop is turned into juice or juice blends. Some cranberries are dried, made into concentrate and sauce or sold fresh, so at least growers don't have to contend with fragile fruit with a very short shelf life. However, consumers are trending away from sweetened beverages and toward bottled waters, tea, coffee and other lower-calorie beverages. Even the cranberry's touted health benefits might not be enough to boost domestic sales in the current climate.
Diverting 25% of this year's crop may eventually help to boost prices, but that isn't a guarantee. Last year, when 15% of the harvest was withheld, prices didn't rebound — and have actually continued to drop. Another part of the oversupply problem, according to The Wall Street Journal, stems from the consumer appeal of Ocean Spray's Craisins, which prompted growers to plant more acreage in the early 2000s and switch to a higher-yielding hybrid version of the plant.
Barring diversification into new cranberry products — which is possible, but seems unlikely — the industry may have to do what the soybean, wheat, cheese and fresh produce industries are doing in the face of retaliatory tariffs: Tough it out until there's a political solution.
- The Wall Street Journal U.S. Cranberry Industry Feels the Bite of Retaliatory Tariffs